Invoice finance allows sellers and exporters to trade on open accounts with clients, and can reduce cash flow problems within a business as cash from the invoices is released quickly. Invoices act as security or as a guarantee for a loan, or can be sold in advance to a third party who will subsequently take the payment off the clients.

Last year alone, over US $3 trillion was traded through export factoring and invoice financing, it is an industry which has been growing in many sectors for the past 5 years.

Invoice Discounting

Invoice discounting is the process whereby a lender will issue a business loan which is secured against a single invoice or the entire loan book of a company and charge the company interest as well as fees.

Factoring

In contrast to invoice discounting, invoice factoring occurs when an invoice or an entire loan book is sold at a reduced rate to a factor, which allows the customer to settle payments with the third party.

What does Invoice Finance Include?

Invoice finance includes any transaction, be that a cross-border or local transaction, which involves you invoicing a customer / end buyer which might not be paid for 30-180 days. Invoice finance offers a solution which allows for the value of the invoice to be paid upfront, less fees, which allows a company working capital to produce the product and send it to the customer.